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Bangla Nagar update

Published by MAC on 2006-09-03

Bangla Nagar update

3rd September 2006

Bangladesh coal mine cancelled - but for how long?

Accusations made against UK development department

Last week the Bangladesh government announced cancellation of the vastly controversial Phulbari open-pit coal project, owned by UK-listed Asia Energy plc. According to the National Committee to Protect Oil, Gas, Natural Resources and Ports, this marks a resounding victory for those who demonstrated against the project on Saturday August 26th, only to be met by the bloody firepower of the state's paramilitary Bangladesh Rifles force.

The official death toll has risen to six, with at at least fifty wounded, while a policeman died during a confrontation with demonstrators in the capital, Dhaka, on Wednesday.

Spokespeople for Asia Energy (and some in government) continue to blame "left wing" parties from outside the area, for the protest which sparked the violence, clearly flying in the face of evidence of vehement and longstanding local opposition to the coal mine, including a prominent role played by Santal indigenous communities. There has been growing cross-party support for a mine-ban from around the country.

Although it seems clear there be will be no contract with the company before the next elections (scheduled for early 2007) , there are fears that the government's announcement was aimed at quelling public unrest, rather than permanently banning open-pit mining in Phulbari - or anywhere else in Bangladesh.

Asia Energy's shares tumbled by 60% in the middle of last week leaving, as the Guardian newspaper noted, some embarassment among the company's directors, who include "a former senior executive from Rio Tinto at the top", and its brokers "the very smart folk of JP Morgan Cazenove."

The Rio Tinto legacy

In fact, Asia Energy's board was almost cloned from Rio Tinto: both Steve Bywater (the company's CEO) and Finance Director, Graham Taggart, worked for Rio Tinto Coal in Australia shortly before joining Asia Energy; Taggart was also chief financial officer for Rio Tinto's controversial Kaltim Prima coal mine in Indonesian Borneo and director of finance for the even more heavily-criticised Kelian gold mine in the same region.

Gary Lye, Asia Energy's Chief Operating Officer at Phulbari, who's been so active in defence of the project over the past few months, worked for twenty years at Rio Tinto's most castigated mine - Panguna, on Bougainville. Doubtless he doesn't savour the irony of having been forced to withdraw twice in succession from a "world-class" project, due to the outrage of neighbouring communities. What hasn't been widely publicised, but was pointed out on this website back in June, is that Barclays Capital secured 2.1 million share options in Asia Energy two years ago; while Gerald Holden, its chair, hopped nimbly from the headship of Barclay's Global Mining and Metals onto the hot seat of the junior company last May , carrying with him a fist of his own share options in Asia Energy. [http://www.minesandcommunities.org/Action/press1101.htm].

Meanwhile, long-standing speculation that Action Aid Bangladesh had come under heavy pressure from Britain's Department for International Development (Dfid) to drop its opposition to the Phulbari project received an airing yesterday by the Observer newspaper [see below and: http://www.minesandcommunities.org/Action/press1199.htm.]

The London newspaper reported allegations that DfiD was somehow involved in the tragic death of Nasreen Huq, former head of Action Aid Bangladesh, who was run over by her own car in April.

While that theory can almost certainly be dismissed, far more credibility should be given to the claim (strenuously denied by DfiD in Dhaka) that Ms. Huq had been told by the UK government department to tone down her campaign against Asia Energy, or face the possibility of Action Aid's funding from the department being cut.

That is what Nasreen Huq told this author when he met her just two weeks before she died

[Roger Moody, Nostromo Research, London, September 3 2006] ]

People of Phulbari celebrate victory

By Staff Reporter

Daily Ittefaq

31st August 2006 Phulbari is reverberated with merriment from a virtual battlefield during the last 24 hours, as thousands of people are celebrating the victory in their struggles that claimed five protesters' lives.

According to report reached in the capital last night, the entire Phulbari of Dinajpur district turned a different look yesterday with joyous dancing on the streets and distributing sweets to each other.

The protesters were found happy with all their demands accepted after hectic negotiations on Wednesday night.

The agreement with its details was read out before thousands of people waiting at Nimtala area to hear the fruition of their movement launched against the Asia Energy, a British company operating in Phulbari coalmine.

The indefinite hartal (general strike) enforced by the local people was an expression of solidarity with the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port was also withdrawn after the agreement.

Reporters visiting the spot said they found thousands of people holding colourfull banners in their hands took to the streets yesterday.

"The entire scene of the Phulbari looked totally changed now," a reporter from the area said last night.

A meeting was held at the Nimtala intersection to celebrate the victory of the people in Phulbari.

Professor Anu Muhammad, Member Secretary of the National Committee to Protect Oil, Gas, Natural Resources and Ports presided over the meeting that was addressed, among others, by CPB President Monjurul Ahsum Khan, Worker's Party Politburo member Haidar Akbar Khan Rano, Zonayed Saki of Samrajjayobasi Birodhi Gano Andolon, Rabindranath Soren of Adivashi Forum and Saifur Islam Jewel, convenor of the Phulbari unit of the Committee.

The speakers said that the victory is the result of the united strength of the people. Thousands of people of Phulbari, including women and Adivashis, fought together to win this victory.

The protesters' six-point demand mainly included withdrawal of the Asia Energy from Phulbari, removal of all establishments from the site of the coal-mining project, compensation to the families of deceased, withdrawal of all cases against the protesters and trial of the persons responsible for Saturday's killings. Expressing their resentment over the speech of Energy Adviser Mahmudur Rahman, they demanded his immediate removal.

The mystery death, a town in uproar and a $1bn UK mines deal

Nasreen Huq was fighting a controversial opencast coal plan when she died in a car crash. Since then, conspiracy theories have multiplied and protests spiralled. Jamie Doward and Mahtab Haider report from Bangladesh

The Observer September 3 2006

The truth died with Nasreen Huq on 24 April, the day a car rammed her against a wall, expunging a life in its 48th year. The private conversations she had with senior government officials in the weeks before her death went with her to the grave.

But the ghost of the popular human rights activist has since continued to weave a haunting narrative which sweeps back and forth between Whitehall and the Indian sub-continent, and seems to have come straight from the pages of a John le Carré novel.

Huq, a household name in her native Bangladesh for her work with the campaign Action Aid, had become concerned about the activities of a British company planning to develop an opencast coal mine in the country's poorest province, a controversial move that, if approved by the government in the capital, Dhaka, will lead to between 40,000 and 100,000 local people losing their homes.

Asia Energy, whose plush offices are in London's Piccadilly and whose shares trade on the London Stock Exchange, wants to mine 15 million tonnes of coal a year for the next 30 years in Phulbari in the north-western province of Dinajpur, selling most of it to fuel-hungry India and China.

This is a huge amount, making this one of the biggest mining projects of its type in the world. Backed by a number of leading British banks, including Barclays, the company will make a huge amount of money if it is allowed to dig for coal there. When Asia Energy signed a provisional agreement with the government in 1998, coal fetched £14.70 a tonne. Today, thanks to the soaring demand, it can fetch £52.50 a tonne if the quality is as high as that in Phulbari.

But Asia Energy's proposals to dramatically alter the landscape around the town have triggered an outcry. Last Saturday thousands of people marched through the town's streets where they were met by a force of armed police.

Both sides blame each other for what happened next. As protesters carrying bows and arrows clashed with the police, shots were fired. In the ensuing melee five people, including a 14-year-old boy, died and scores more were wounded, an event that on Wednesday triggered a national strike as thousands turned out to protest against the killings.

Anu Muhammad, who has led protests at Phulbari for the past 16 months, remembers the events of Saturday evening clearly. 'We were about 30,000 people - all local farmers, day labourers and members of the local aboriginal communities who marched to protest outside the local Asia Energy office,' Muhammad told The Observer. 'As evening descended we started back towards the town centre. Ten minutes had passed when we suddenly heard the crack of rifle shots behind us. It was utter chaos. The police were charging and there were dead bodies on the street.'

However, Fazlul Haque, the local police chief, saw it differently: 'The mob turned violent and the paramilitary were left with no choice but to open fire.' Asia Energy blames the riot on a 'rentamob' which it claims was bussed in from far away. 'Around 95 per cent of them weren't from the local community,' said David Lenigas, a non-executive director of the company. These people are carrying on like we've got a coal mine there. We haven't. All we've done is spend $20m on a feasibility study.'

The company claims that the vast majority of the local population support its plans. But it is clear that experts on sustainability, such as Nasreen Huq, have long expressed reservations which may play powerfully with politicians in the run-up to Bangladesh's general election, which is due next year.

Huq is known to have raised concerns about Asia Energy's plans when she met company representatives last February. According to several people close to her, the UK Department for International Development was becoming increasingly concerned by her opposition to the scheme. She talked to her sister Shireen, deputy programme director at the Danish aid agency Danida, who said that Nasreen told her that David Wood, the department's chief in Dhaka, asked her to drop her campaign against the mine.

'I remember she was furious,' Shireen Huq said. 'She said: "They think they are the East India Company, telling us to leave Asia Energy alone because Action Aid is a British organisation".'

As Nasreen learnt more about the plans for the mine, she contacted lawyers in London with the idea of challenging the deal in an international court.

Shireen Huq says that her sister was planning to share a dossier she had compiled with legal friends and the press. However, Action Aid in Bangladesh says it knows of no such dossier.

'After Nasreen's death, her colleagues came to visit us. This was early times, so it was quite emotional,' Shireen said. 'They told me that David Wood had told Nasreen that he was "under a lot of heat from London" and that whatever differences Action Aid had with Asia Energy they should be settled.'

Claims that the department told Nasreen to drop her opposition to the mine, and warned her that it could threaten the future funding for Action Aid, are categorically denied by government officials in London and in Bangladesh. 'Any such rumours are totally false,' said a British High Commission spokesman in Bangladesh. Neither the commission in Dhaka nor the department's representative there had 'summoned Nasreen before her death. Nor did either organisation threaten to withdraw assistance to Action Aid'.

Nevertheless, the manner of Nasreen's death has fuelled conspiracy theories in a country where they are as common as rain. The person at the wheel of the car that rammed into her was her own driver, a fellow Action Aid employee. Initially the police treated the death as an accident but, following an outcry from Nasreen's friends, they launched a murder investigation and arrested the driver, who has not been charged but remains under investigation.

Shireen maintains that what happened to her sister was no accident. 'We believe Nasreen's death was a pre-planned murder and that's why we gave permission to exhume her body for a post mortem,' she said.

Many other people are not convinced of this, however. 'We think it was a tragic accident,' said Jane Moyo, head of media at Action Aid who was in Bangladesh with Nasreen shortly before she died. Moyo believed that the driver's 'foot slipped and went down on the accelerator instead of the brake'.

Privately some of the Action Aid staff feel that it was not Nasreen's place to campaign against the mine. The charity specialises in education and health projects in developing countries, not environmental issues.

The organisation told The Observer it does not know whether any British official told her to drop her campaign. 'The family did make those claims to us,' Moyo confirmed. 'But to be frank we just don't know. We have no record of her saying those things.' Although the department is not involved with the project financially, it is not hard to see why it would at least tacitly endorse Asia Energy's plans.

The company has pledged to bring 2,000 jobs to the poorest area in Bangladesh. More than half of its people are illiterate. The firm claims that it will spend $250m on building schools and hospitals for those who will lose their homes, and even relocate them in new villages. 'This town didn't exist until 1970,' Lenigas said of Phulbari . 'It's not like it's 300 years old. A lot of people live in tin shacks or mud houses.'

But others have yet to be convinced. Many feel a putative profit-sharing deal struck by Asia Energy and the Bangladesh government is heavily weighted in the mining company's favour. Scientists have sounded a warning that the water which will be pumped out of the mine to get to the coal may result in drying up underground aquifers.

Roger Moody, of the firm Nostromo Research, an expert on mining companies and corporate responsibility, visited the site earlier this year and spoke to a number of local charities and community groups. 'I have no doubt from the people that I talked to that the majority are against it,' Moody said. 'There is very strong local opposition from all sides.'

Asia Energy, which is to withdraw staff from the region until the situation calms down, argues that mining underground, which the local people would prefer, is not economical. It also claims that the protests are whipped up by left-wing militants. 'In October the government goes into caretaker mode and the country is run by the judiciary before elections in January,' Lenigas said. 'You've basically got two months left for people to get on their soap box.'

'I'm not convinced,' Moody said. 'Asia Energy hasn't consulted local people' - a claim that is disputed by the company, which has opened an information centre in the region to explain its proposals and boasts an impressive range of supporters, from universities to charities.

Amid the claims and the counter-claims only one thing is certain. Asia Energy cannot afford to have the scheme rejected. Its future is predicated on the $1.1bn plan being approved.

But last Saturday's tragic events will have done little to reassure Asia Energy's investors, who have pumped millions of pounds into the company since its flotation in 2004. The company's shares were suspended on Thursday at its own request after they plunged in value by 59 per cent in one day, amid claims the government had said no.

If that is true, it will be a setback for those who claimed that the mine would bring prosperity to the dirt-poor region. But it will also be a vindication of Nasreen Huq's campaign, which has given events in a long ignored corner of Bangladesh global significance.

'We would say to any multinational company you can't ride roughshod over the needs of the poorest people,' Moyo said. 'We believe that this should be Nasreen's legacy.'

Phulbari agitation: Foreign investment becomes uncertain

By Staff Reporter

The New Nation

1st September 2006

The Bangladesh government appears to have denied permission for a US$1b-plus open-pit coal mine to be built in the country, in response to violent protests over the proposed project, says Economist Intelligence Unit.

Media reports indicate that Asia Energy, a UK firm, will no longer be able to develop the mine in the northern Bangladeshi town of Phulbari. If true, the abandonment of the project would mark a further blow to the country's foreign investment prospects, coming just a few weeks after Tata Group, an Indian conglomerate, suspended its plans to invest US$2.5b in steel, power and coal sectors.

"Political factors are also likely to present an obstacle to such deals going ahead," it says. The government's reported decision on Phulbari came about in response to a general strike and almost a week of demonstrations that resulted in several deaths as protesters clashed with security forces. "At the heart of the dispute are claims by opponents of the project that it would create severe environmental damage and displace over 100,000 people," the Economist Intelligence Unit said.

Asia Energy, however, has claimed that the environmental impact would be lower, that far fewer residents would be displaced and that those who were displaced would be resettled and compensated. "The irony of the situation is that the mine, if built, could generate revenue for Bangladesh.

It would also produce fuel for electricity generation that might help the country to reduce its chronic power shortages. Although Bangladesh has abundant natural gas reserves, electricity generation per head is among the lowest in the world," it said.

There is huge unmet commercial demand for energy, and the lack of reliable sources of electricity has deterred foreign investment and held back economic growth. There are frequent power cuts, and factories are often forced to run fewer shifts or to opt for their own expensive generators, driving up the cost of production.

Around 85 pc of households have no electricity, according to the report.

"Political nationalism, motivated by the approach of a general election, may be a factor behind the difficulties potential foreign investors are facing in the country.

It is relatively easy for the government's opponents to exploit popular suspicion of foreign investment in strategic resources, requiring the government to take a tough line on foreign investors to avoid being seen as selling the country out," says the report.

In the case of the proposed Tata investment, there was the added factor that the project would have involved an Indian company, making the issue doubly sensitive politically. In the Phulbari case, there has been speculation that leftwing groups orchestrated the protests against the coal-mine plans for political reasons.

Certainly, Bangladesh's political scene will be increasingly fraught as the election nears. The term of office of the coalition government, led by the Bangladesh Nationalist Party (BNP), ends in October, when it will hand over power to a non-partisan caretaker government. The caretaker government will oversee the election, which must be held within 90 days of the dissolution of parliament.

However, the run-up to the election is almost certain to be marredby controversy and by bitter rivalry between the BNP and the main opposition Awami League (AL). Campaign violence is also highly likely. Strikes will increase in frequency and duration.

The AL, in particular, will be preoccupied with efforts to broaden its support base in an attempt to secure the bulk of the popular vote, the Economist observed.

Bangladesh hit by violent protests over British firm's coal mine plan

By Justin Huggler, Asia Correspondent , The Independent

31st August 2006

Bangladesh has been brought to a standstill by a general strike and violent protests against a British company's plans to develop a huge open coal mine. Protesters accused the company, Asia Energy, of stripping Bangladesh of its resources and forcing tens of thousands of people from their homes.

One policeman was killed when he was hit by a stone, and several demonstrators were injured in police baton charges in the capital, Dhaka. At the weekend, six people were shot dead by security forces in a protest at the site of the proposed mine.

Asia Energy plc is planning a $1.1bn (£578m) investment in mining 570 million tons of coal at Phulbari, in northern Bangladesh. The company says the mine will earn Bangladesh billions of dollars in profit and provide much-needed fuel for power generation. It is negotiating for backing from the Asian Development Bank and the US Ex-Im Bank.

But the mine's opponents say it will displace more than 100,000 people, destroy hundreds of thousands of trees and damage the environment.

Over the weekend huge numbers of people, many of them armed with rocks and machetes, converged at the site of the proposed mine in Phulbari. Witnesses put the number as high as 30,000. The police called on the paramilitary Bangladesh Rifles for backup, and they opened fire into the crowd, killing six and wounding more than 300.

"The reason this is so explosive is that relocating people is a much bigger issue here than in the West," said Sharyar Khan of Bangladesh's Daily Star newspaper. "Bangladesh is already so crowded people feel there is nowhere else to go. They have very little and they feel if you take away their land you are taking away what little they have. That is why they react so desperately."

Asia Energy says 40,000 people will be displaced, and has promised to build them new homes in purpose-built towns away from the site.

But the issue is complicated by the fact that many of those who will be displaced - the exact figure is disputed - are members of the Santal indigenous tribal people. Like most tribal groups in South Asia, they do not have any land deeds or other documents proving ownership of their land, but their families have lived on it for centuries. Many of the Santals fear they will miss out on being rehoused because they do not have the paperwork.

For them, the deforestation issue is important, too. Most still live traditional lives, cooking on firewood. The mine's opponents say it will destroy 2.5 million trees; Asia Energy says it will destroy 800,000.

But Asia Energy says the protests have been politically motivated. "What you had was a lot of rent-a-crowd," said David Lenigas, a director of the company. "They were busing them in from Dhaka.

"The protests are being organised by a group that has connections to far-left political groups, and the opposition has seen an opportunity in them ahead of the elections. We've done surveys in the area and 95 per cent of the local people support the project."

The Bangladeshi government has been scrabbling to contain the discontent, insisting the project will go ahead as planned. Bangladesh suffers from drastic power shortages: there are daily six-hour power cuts in the business districts of Dhaka.

Until recently, the country generated all its electricity from gas, but its gas reserves are running out, and the government is desperate to tap its massive reserves of coal.

Bangladesh has been brought to a standstill by a general strike and violent protests against a British company's plans to develop a huge open coal mine. Protesters accused the company, Asia Energy, of stripping Bangladesh of its resources and forcing tens of thousands of people from their homes.

One policeman was killed when he was hit by a stone, and several demonstrators were injured in police baton charges in the capital, Dhaka. At the weekend, six people were shot dead by security forces in a protest at the site of the proposed mine.

Asia Energy plc is planning a $1.1bn (£578m) investment in mining 570 million tons of coal at Phulbari, in northern Bangladesh. The company says the mine will earn Bangladesh billions of dollars in profit and provide much-needed fuel for power generation. It is negotiating for backing from the Asian Development Bank and the US Ex-Im Bank.

But the mine's opponents say it will displace more than 100,000 people, destroy hundreds of thousands of trees and damage the environment.

Over the weekend huge numbers of people, many of them armed with rocks and machetes, converged at the site of the proposed mine in Phulbari. Witnesses put the number as high as 30,000. The police called on the paramilitary Bangladesh Rifles for backup, and they opened fire into the crowd, killing six and wounding more than 300.

"The reason this is so explosive is that relocating people is a much bigger issue here than in the West," said Sharyar Khan of Bangladesh's Daily Star newspaper. "Bangladesh is already so crowded people feel there is nowhere else to go. They have very little and they feel if you take away their land you are taking away what little they have. That is why they react so desperately."Asia Energy says 40,000 people will be displaced, and has promised to build them new homes in purpose-built towns away from the site.

But the issue is complicated by the fact that many of those who will be displaced - the exact figure is disputed - are members of the Santal indigenous tribal people. Like most tribal groups in South Asia, they do not have any land deeds or other documents proving ownership of their land, but their families have lived on it for centuries. Many of the Santals fear they will miss out on being rehoused because they do not have the paperwork.

For them, the deforestation issue is important, too. Most still live traditional lives, cooking on firewood. The mine's opponents say it will destroy 2.5 million trees; Asia Energy says it will destroy 800,000.

But Asia Energy says the protests have been politically motivated. "What you had was a lot of rent-a-crowd," said David Lenigas, a director of the company. "They were busing them in from Dhaka.

"The protests are being organised by a group that has connections to far-left political groups, and the opposition has seen an opportunity in them ahead of the elections. We've done surveys in the area and 95 per cent of the local people support the project."

The Bangladeshi government has been scrabbling to contain the discontent, insisting the project will go ahead as planned. Bangladesh suffers from drastic power shortages: there are daily six-hour power cuts in the business districts of Dhaka.

Until recently, the country generated all its electricity from gas, but its gas reserves are running out, and the government is desperate to tap its massive reserves of coal.

"Making natural resources work for the people of Bangladesh," is Asia Energy's corporate catchline. Not all Bangladeshis see it that way. A crowd of 30,000 protested at the weekend about the company's plans to mine a huge coal deposit in the Phulbari district. Six died as paramilitaries allegedly fired into the crowd.

The Bangladeshi government, according to local reports, now wants to cancel all agreements with Asia Energy. The company says it has had no notification, but it doesn't look good. The shares crashed 60% before trading was halted.

Some big names will be embarrassed if the worst materialises. Asia Energy, worth £350m not long ago, was not supposed to be a speculative punt.

There's a former senior executive from Rio Tinto at the top and the brokers are the very smart folk of JP Morgan Cazenove.